Shigenobu Nagamori, founder of Nidec, the world’s largest motor-parts manufacturer, has been implicated in a major accounting scandal in Japan that threatens the company’s future. An independent three-person committee released a 250-page report accusing Nagamori and eight former executives of civil liability for their roles in Japan’s biggest accounting scandal in a decade. The report concluded that Nagamori suppressed an internal call in 2017 for an inquiry into questionable assets valued at approximately ¥22 billion ($139 million).

According to the committee, Nagamori dismissed a proposal from a Nidec executive to engage external lawyers and accountants to investigate these potentially problematic assets. The report also indicated that Nagamori suggested informing the board only if the suspect figure was cut in half. It states that Nagamori failed to report suspicions of accounting fraud to the board of directors and corporate auditors, thereby neglecting his duties.

Nidec’s founder, once celebrated in Japan’s corporate circles and even featured as a heroic figure in a company-published biographical comic book, resigned as chair emeritus in February but remains the company’s second-largest shareholder. Internal investigations have characterized Nagamori as a highly demanding leader whose culture of intense pressure contributed to many internal challenges at Nidec. The recent report further criticized his accounting approach, asserting that profit levels were predetermined and then adjusted backward to fit acceptable asset impairments.

The financial fallout from the scandal has hit Nidec hard. Its shares have fallen to their lowest levels in nearly a decade, and its market capitalization now stands at about ¥2.1 trillion. Last month, PwC Japan declined to approve Nidec’s financial statements despite the company recording fresh impairment charges totaling ¥632 billion. The company faces a time-sensitive battle to demonstrate to the Tokyo Stock Exchange that its internal controls have improved sufficiently or risk delisting.

Founded in 1973 by Nagamori and three graduates in Kyoto, Nidec expanded aggressively, completing 75 acquisitions over 42 years and cementing its position as the dominant global motor-parts producer. Its assertive dealmaking was previously seen as emblematic of a new era of confident Japanese capitalism.

Recently, Oasis Management, a prominent activist investor in Japan, disclosed that it had become Nidec’s largest shareholder, surpassing Nagamori with a 9 percent stake. The firm is reportedly advocating for taking Nidec private. However, bankers caution that ongoing legal uncertainties surrounding Nidec’s accounting issues may complicate any potential sale or privatization, as prospective buyers will need to carefully assess related liabilities. Nagamori has not publicly responded to the allegations outlined in the report.